Sign of things to come???

KingKenny7

Just heard of the news that 7 houses a week are being repocessed.

galwaybabe

Was that RTE? Want to look at site

Villain

I don't think that figure is a huge increase on numbers for the past year or two, its just the media are reporting them now. Obviously with construction jobs being lost some people will find it hard to meet mortgage repayments especially unskilled labourer's who have been earning a €600 -€1000 a week and secured loans on those wages and now find themselves on a 2 day week or on the Dole queue.

However with talks of a recession in the US, interest rates will most likely drop there and the UK has also hinted at possible interest rate drops so I don't think the ECB will raise interest rates, they may even start to reduce them next year, so I think if people can afford the repayments today and can keep employment there shouldn't be a huge increase in reprocessions.

The worst case scenario is where construction workers have taken out large mortgages and tied themsselves into fixed rate mortgages which are lower than todays variable rates so when that term expires they will see an increase in repayments, that coupled with a drop in salary will push people into trouble.

KingKenny7

galwaybabe wrote: »

Was that RTE? Want to look at site

I just heard it on radio 1, they said 45 families could be homeless by christmas.

galwaybabe

KingKenny7 wrote: »

I just heard it on radio 1, they said 45 families could be homeless by christmas.

Doh! Not on the website. Will have to wait till 11 I guess. Not surprised at all at news. I'd say figures are way higher than what is reported. It's not in the bank's interest to admit how much they are up to their necks in dodgy mortgages that shouldn't have been approved in the first place

The_Conductor

In Monday's Indo there was a report on this- the tagline was that 56 reposessions had been granted in the month of October and that November figures were running even higher. The vast bulk of these reposessions are being granted to one company- I think it was called Smart mortgages (UK based with operations here in the subprime sector).

S.

Do-more

Report on Tuesday's News at One calling for regulation of sub-prime lenders, mentions a backlog of 200 repo's waiting to go before the High Court.

miju

irish1 wrote: »

I don't think that figure is a huge increase on numbers for the past year or two,

if memory serves me right its a massive jump in figures. it's detailed somewhere in the middle of the housing bubble thread but there is a link in there somewhere showing up until last year there were only approx 30-40 per year

its just the media are reporting them now. Obviously with construction jobs being lost some people will find it hard to meet mortgage repayments especially unskilled labourer's who have been earning a €600 -€1000 a week and secured loans on those wages and now find themselves on a 2 day week or on the Dole queue.

irish1 wrote: »

However with talks of a recession in the US, interest rates will most likely drop there and the UK has also hinted at possible interest rate drops so I don't think the ECB will raise interest rates, they may even start to reduce them next year, so I think if people can afford the repayments today and can keep employment there shouldn't be a huge increase in reprocessions.

quite the opposite in fact. it's now seroiusly looking like inflation in some parts of the major EU economies is about to skyrocket due to oil , grain , wheat and milk prices.

the ECB have made their intent clear anyways in that they want to raise rates again but not until the current market turmoil has settled down

Do-more

There was also coverage of rising repossesions on Tuesday's "The Last Word" link report starts at 18mins 14secs

Pa ElGrande

faceman put up some of the stats in the housing bubble thread.

faceman wrote: »

Regard the repossessions figures i promised.
2001 - 25 homes repossessed
2006 - 50 homes

Might now sound crazy but its the applications for repossession this year that are more worrying:
1 day alone in the last week of October of this year saw a court received 17 new repossession applications. Thats one court.
In September in one day's sitting relating to repossessions (heard in the high court), over a 2 hour period, 45 cases were put forward!

Unfortunately i don't have the stats yet and successful repossessions so far this year nor do i have the stats on applications in previous years but its food for thought.

We know investors in Start mortgages want out, their business model is no longer viable in current market conditions. So for the 4,000 or so people who have mortgages through them in Ireland, they can expect no leeway if they get into difficulties. Unfortunately this credit crisis has only just begun and there is at least another 18 months to go yet before the credit crunch works its way through the system. The credit markets have also seized up to the extent that the lenders (not just the Irish ones) cannot securitise mortgages, so there is no way they are able to lend at the same level they did in previous years. Nor with oversupply of property and the downward spiral in prices will they be inclined to lend as much. By the end of 2008 there will be no 100% mortgages available in Ireland. Regarding interest rates the ECB may be nervous about having to raise rates at the moment and they are trying to 'manage inflation' by trying to talk it down. This will fail and they will eventually have to raise rates substantially, at least towards a 6% to 8% base rate.

In my opinion people should work to pay down any unnecessary debts, especially the credit card debts, build up a buffer for emergencies (pay day millionaires will get wiped out), if you loose your job in a recession, it can take up to a year to find another job compared with three to four months in a boom and it will likely not pay as well. (Wages fall in recession - ref IT sector wages post dot com boom). Also do not put all your money in one bank, one or more of the Irish lenders ARE going to fail, this is certain.

mikemac

Pa ElGrande wrote: »

Also do not put all your money in one bank, one or more of the Irish lenders ARE going to fail, this is certain.

:eek:
There was a time when people could not begin to comprehend that house prices could fall but that is changing.
But do you realy think an Irish bank could fail? That's just terrifying to people, your life savings (bar what the state gurantees) wiped out.
I know there is the Northern Rock example but that wasn't anywhere close to total failure from what I've read

Falling house prices doesn't frighten me, in fact I welcome it and but a failing bank is truely a doomsday scenario.
I got images of pensioners losing everything when I read your post.:(

Pa ElGrande

micmclo wrote: »

:eek:
There was a time when people could not begin to comprehend that house prices could fall but that is changing.
But do you really think an Irish bank could fail? That's just terrifying to people, your life savings (bar what the state guarantees) wiped out.

I have said previously in the housing bubble thread we have a text book bubble, we are doing nothing that other countries have not done before and the consequences will be the same.
Read "A Short History of Financial Euphoria" by John Kenneth Galbraith if you want to get the idea how the script goes. There is more information on concerns about the health of Irish banks in the thread Developers have your money.
In answer to your question, yes I really do think the Irish banking system is at risk and there will be failure. I have no confidence that the Central Bank or Irish government is capable of intervening on the scale that the Bank of England did with Northern Rock. There is only one thing different about this bubble compared with previous mania's and that is the scale, its global.

uberwolf

miju wrote: »

quite the opposite in fact. it's now seroiusly looking like inflation in some parts of the major EU economies is about to skyrocket due to oil , grain , wheat and milk prices.

the ECB have made their intent clear anyways in that they want to raise rates again but not until the current market turmoil has settled down

inflation is not the only factor ECB concern themselves with. Market consensus, for the time being, is for rates to decrease. Short term rates are above the longer term rates, even if you allow for the credit crunch factor in the 1 month and 3 month rates.

I have said previously in the housing bubble thread we have a text book bubble, we are doing nothing that other countries have not done before and the consequences will be the same.

there is one vital difference here, and it's not in our favour. Not having any influence on the interest rates. This removes it from the textbooks somewhat.

the_syco

micmclo wrote: »

I know there is the Northern Rock example but that wasn't anywhere close to total failure from what I've read

Food for thought: the one item that very nearly killed Northern Rock was people taking money out. Everyone takes their money out, and the bank will crumble, as it has no money.

Villain

miju wrote: »

quite the opposite in fact. it's now seroiusly looking like inflation in some parts of the major EU economies is about to skyrocket due to oil , grain , wheat and milk prices.

the ECB have made their intent clear anyways in that they want to raise rates again but not until the current market turmoil has settled down

I think you will be proved wrong there, the ECB will NOT raise rates while the US and UK drop them, it would be crazy.

Villain

the_syco wrote: »

Food for thought: the one item that very nearly killed Northern Rock was people taking money out. Everyone takes their money out, and the bank will crumble, as it has no money.

Not quite a good loan book is worth as much if not more than deposits as people have to pay loans back deposits on the other hand can be taken out when customers see fit, thats what saved Northern Rock

Pa ElGrande

uberwolf wrote: »

there is one vital difference here, and it's not in our favour. Not having any influence on the interest rates. This removes it from the textbooks somewhat.

Individual American states don't set their interest rates either, so a rate set by the privately run federal reserve, might suit a state like New Jersey, but the same rate would not suit a state such as Oregon. Ireland is not the only country in the Eurozone with a popped housing bubble, Spain is affected as well and France to a lesser extent. Also the ability to set interest rates makes no difference to the outcome (see previous housing busts in Britain, Norway & Finland) and will often prolong the bust just like Japan's bust (16 years), setting the rates to practically 0% did not halt the slide. If you have an hour to spare this video explains how the bust works its way through the system.

patrickolee

KingKenny7 wrote: »

Just heard of the news that 7 houses a week are being repocessed.

More food for thought, thats around the same number of people that die on the roads every week. Having a house repo'd is not that bad!

Do-more

The OECD has just released a report predicting $300 Billion in Write-Offs due to sub-prime and Alt-A mortgages in the US.

The O.E.C.D. cautioned that a rougher period may yet await financial markets, which have swooned in recent days as traders try to calculate the impact of mortgage-sector losses on the overall economy.

“We still have not hit the worst point in resets, delinquencies and ultimate losses on mortgages,” it said.

Looks like things can only get worse before they get better...

As I see it, the real danger to the banks here is not from individual home owners but from loans to property developers going bad.

As has already been said it only needs there be a perception of trouble to start a run on a bank.

I believe that we will see some high profile take overs of Irish banks rather than outright collapse.

KingKenny7

Heres a question for you lads.

I get a mortgage from bank x, 3 years in bank x goes bust. What happens to my mortgage???

The_Conductor

KingKenny7 wrote: »

Heres a question for you lads.

I get a mortgage from bank x, 3 years in bank x goes bust. What happens to my mortgage???

Normally your mortgage will have been securitised and sold on as part of an investment package to other institutions. You are then liable to honor that debt towards the further institutions. How they would propose to chase you, I don't know though......

KingKenny7

smccarrick wrote: »

Normally your mortgage will have been securitised and sold on as part of an investment package to other institutions. You are then liable to honor that debt towards the further institutions. How they would propose to chase you, I don't know though......

Its something worth looking into, if you want a mortgage free house after 3 years

Villain

No KinKenny7 Mortgage's can be sold from bank to bank it happens a lot in other countries, so once a bank goes under the Mortgage will be sold to another bank who will have the same legal righst to demand repayments or reprocess.

SkepticOne

Unfortunately, even if they don't bother collecting the payments for a few years (unlikely!) you will still owe the outstanding amount plus interest to whoever owns the debt.